Purchasing Property in Australia from Overseas – Expat Mortgages

When you decide to purchase property in Australia – whether you are a foreigner or an Australian – you must be aware of the fact that there are a few aspects you should consider. After all, if purchasing property was an easy thing to do, we’d all do it and never look back.

First of all, we have the entire process that comes with the decision to purchase property – naturally, this process is not a short one. Then, we have all the things that you should know about the property market.

What Should You Know About Property in Australia?

The property market of Australia comes with a lot of benefits for Australian expats, overseas investors, and even Australian residents that hold permanent or temporary visas.

Moreover, it seems that the market is characterized by stability – with a proven record, as well. For example:

1. Little speculation – due to the fact that roughly 70% of the households here are owned by homeowners, there is little to no speculation.

2. It is also known the fact that most capital cities face with a consistent under supply in housing.

3. Australia comes with responsible lending legislation, as well as with prudent economic management. Ensured by the Australian Prudential Regulation Authority, this reduced the risk of asset bubble prices.

4. On top of it all, prices here never fell more than around 20% in a year.

Easy Investment

While a lot of countries come with restrictive laws in terms of foreign investment – or banking regulations that make the whole process difficult – Australia likes to keep it simple, so to speak. Therefore:

1. You don’t need to buy with a citizen or set up a company in the country if you wish to purchase a property.

2. Even though you might come across additional taxes, government approval of purchase for foreign citizens is usually simple.

3. You can also rely on a specialist mortgage broker to assist you and determine if you qualify for a foreigner mortgage.

4. Through the National Consumer Credit Protection Act 2009, Australia has an effective and strong consumer protection legislation.

5. The legal system here is similar to the UK, Singapore, and Hong Kong, making it easier for overseas investors to adapt to the market.

6. There is little to no economic, political, or social instability in Australia.

How to Purchase Property in Australia

Here are the steps that you should follow if you want to purchase property in Australia and avoid any issues.

Budget and Planning

As soon as you start thinking to buy property here, it is important that you research, budget and plan your property purchase. Even though you think you have the perfect location in mind, it is always better to speak with a real estate agent. They can give you advice in terms of selecting an affordable area.

Team of Professionals

Naturally, you will need a team of professionals to help you with the purchase process – some of these are required, while some are optional.

You will need a conveyancer or solicitor – they will handle the legal work for you. They will manage the transfer of ownership, analyze the property, and review the contract. In Western Australia, these are called settlement agents.

You will also need a mortgage broker, an accountant, and a buyers agent – the last two are optional and only needed if required.

Pre-Approved Loan

Before you begin looking for a property, it is important that you get your loan pre-approved. This is because, while others will waste time putting their mortgage applications together, you will have the chance to get your hands on the best investment possible.

Moreover, you will know that you are, in fact, eligible for a loan and you’ll be aware of the amount of money that you can borrow.

After all, there’s no use in wasting time to find a property if you are not sure whether your loan will get approved or not.

Apply for Mortgage

Applying for a mortgage can be quite easy for residents. However, non-residents and foreign investors will have to deal with a more complex procedure, mainly due to the lending criteria.

For example, foreign investors have around five lenders to choose from when applying for a loan.

Qualification with the FIRB

As a temporary visa holder or non-resident, you are legally required to get permission to buy property in Australia. You can get this permission from the Foreign Investment Review Board.

Naturally, permanent residents, citizens, and New Zealand citizens don’t require this type of approval. However, getting it implies a simple process that takes only up to two weeks.

In terms of fees, they can be as low as $5,700 or as high as $104,100. For properties valued at $10 million or higher, you will have to reach out to the Australian Taxation Office for an estimate.

Finding a Property

You can either plan a trip across Australia and search for the property of your dreams or rely on an agent if you have employed one.

We don’t even have to mention that you will have to compare your own properties to similar-sized ones in order to get an accurate value of the property that you will purchase. You will have to be very careful when searching for a property to buy.

Negotiating the Purchase Price

Keep in mind that Australian properties will usually sell for roughly 10% less than the price they are listed for. Obviously, this depends on the type of property, market, and location.

An agent may also help you with negotiating the purchase price.

Formal Mortgage Approval

As soon as you find a property to buy, you can send the contract of sale to the mortgage broker and, thus, proceed with the formal mortgage approval. You should not commit to buying a property until you have received formal approval of your mortgage.

Exchange Contracts and Deposit Payment

After your loan is formally approved, you can exchange your contract and the conveyancer or solicitor you have employed will give you the sign to proceed. You will usually need to put down a deposit of 10%.

FIRB Approval

Make sure that the contract you are about to sign has the subject to FIRB approval clause so that the FIRB has 30 days to make a decision.

For example, if your FIRB proposal is rejected and you have the aforementioned clause mentioned in the contract, you will not lose your deposit. If the clause is missing, then you won’t be seeing your deposit back.

Final Arrangements

Once the contract is exchanged, you can send a copy to the FIRB, for approval. Also, after the formal approval of your mortgage, your bank will send the loan contract to you.

Settling In

This is the part where the property changes hands and when your loan is advanced. This process will be handled by your mortgage broker/bank and your solicitor/conveyancer – you don’t need to be present.

The Bottom Line

In short, the Australian property market is open for any person that wants to buy or invest in property here. Even though non-residents may have a harder time dealing with the steps we have mentioned above, they will not be stopped by any legislation when purchasing property here.

No matter your issue or questions, you can always reach out to us. We are here to answer your questions and provide you with the information you need to find the right lender for you.

Moreover, we will guide you through the entire process so that you get to pick the better lender, so to say. Contact us today – we’re more than happy to help you! Contact us on on 02 9121 6247 or submit your scenario online.